Advice Needed -- Subdividing a Lot as an Investment

[Darren Maloney]

Level 2.5 acre lot for sale is surrounded by completed homes and has SFR residential zoning. Reading setbacks, frontages and minimum lot sizes would indicate that existing lots could be subdivided into multiple lots, maybe 10 on paper. Had someone say they it was uneconomic to do so. How expensive is it to subdivide lots and get sewer and water hookups?

Since adjacent properties, I would think hookups will be less onerous that a rural lot.  Seems like this could be a good investment when people are buying small houses for $400k+ just for the land and tearing down the existing dwelling. 

I don't know anything about City of Austin timelines, how difficult this is if time is not a concern, and how much the development costs are per lot or in total for a small subdivision.

Anyone have any thoughts on the matter? Thanks in advance!

[Campbell Key]

Hi @Darren Maloney - I'm a civil engineer and have worked on several Austin subdivisions. Currently working on one in SW Austin that sounds very similar to this (about 2 acres, cutting it up into 12 duplex-size lots). I'd like to hear why you've been told it would be uneconomic to subdivide this particular piece of land.  Subdividing in Austin has become crazy expensive over the last couple of years, but you can still make crazy good returns. Its hard to provide exact timeframe and cost without knowing the specific location of the tract or any info about it except size, but as a rough estimate, you're probably looking at about a year in processing and upwards of $100k in city fees, if not more. This would include project assessment application fees (probably necessary), subdivision application fees, parkland dedication, fee-in-lieu of water quality controls (if applicable), etc. The exact timeframe and amount can vary drastically based on the specific tract/situation though. 

I'd be happy to share more and see if I can help - feel free to shoot me a dm if you'd like to connect!